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GlobeSt.com EXCLUSIVE: Retailer Leaps From Tenant to Owner

PHOENIX-After leasing 9,700 sf for eight months, the owner of Clothing Depot decides to pay $8.9 million for the 63,987-sf, grocery-anchored center. The fully leased asset trades at a 7.4% cap rate.

By Jennifer D. Duell | Updated on July 19, 2005

PHOENIX-A retail tenant in the shopping center at the southeast corner of 32nd Street and McDowell Road has purchased the property for $8.9 million in an off-market transaction. The buyer acquired the 63,987-sf, grocery-anchored center from CHAI LLC of Colorado Springs, CO.

Buyer Young Lee opened his apparel shop, Clothing Depot, in 9,700 sf in November 2004 in the 1940s-era center, according to Sean Bishop, an associate broker with Eagle Commercial Realty Services. “I did the Clothing Depot lease and Lee came to me and said that he had some 1031 exchange money to invest and was interested in buying the center,” Bishop tells GlobeSt.com. “At the same time, the owner, which is a partnership of three siblings, decided it was time to sell. The siblings had inherited the center from their parents, who had owned the center since the 1950s.” The center is known simply as the 32nd and McDowell shopping center.

Bishop says Lee paid a “fair value” for the center, which traded at a 7.4% cap rate. “There’s a lot of deferred maintenance to take care of,” Bishop adds. “Some of the HVAC systems have been there for more than 30 years.” But, he says, the center still offers a steady cash flow.

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